Trump's tariffs sow worries among Iowa farmers, manufacturers

China warned on Friday it would fight back "at any cost" with fresh trade measures if the United States continues on its path of protectionism, hours after President Donald Trump threatened to slap an additional $100 billion in tariffs on Chinese goods.
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Rick Kimberley, a fifth-generation family farmer of rural Maxwell, combines soybeans on Tuesday, Oct. 17, 2017, in Polk County. The Kimberleys hosted Chinese President Xi Jingping on their farm when he visited Iowa in 2012.(Photo: Kelsey Kremer/The Register and Pulitzer Center)

"I don't think we can say he's hurt us yet. But the clock is ticking," said Walton, who raises corn, soybeans and cattle near Wilton, Iowa.

"They've got about two months to negotiate a better agreement between the two countries," Walton said. "If those sanctions go into place, that changes the game.

"I'll have to revisit my support," the fourth-generation farmer said.

'China is clearly putting politics over economics'

Trump said the latest tariffs are in response to China's retaliation against "American farmers and manufacturers."

Last week, China responded to U.S. sanctions with duties on $50 billion of U.S. products, including soybeans, beef, corn and pork, products all important to Iowa's economy.

The 25% tariff on pork already has been put in place, costing Iowa, the nation's top pork producer, $400 million from declining prices, said Dermot Hayes, an Iowa State University agricultural economist.

If China responds with $100 billion in new tariffs, it will cover most U.S. products, Hayes said.

The U.S. exported about $130 billion in goods to China last year while importing nearly $506 billion in Chinese goods, leaving the U.S. with a $375 billion deficit.

Hayes said China is targeting Trump supporters with its farm sanctions, especially tariffs on soybeans.

"China is clearly putting politics over economics," Hayes said, adding the country needs U.S. soybeans.

China imports about 60% of the world's soybeans, last year buying $14 billion worth from U.S. growers. Iowa growers estimate that every third row of beans planted in the state is exported to China. Iowa ranked second nationally in soybean production last year.

On Tuesday, China's president, Xi Jinping, made possible concessions in the escalating trade fight. He promised to cut China’s auto tariffs and improve intellectual property protection, aiming to defuse a dispute with Washington that investors worry could set back the global economic recovery.

"I'm not thrilled about us being used as a pawn," said Walton, who blames both the U.S. and China for putting agriculture in the middle of the trade fight.

'A cold bucket of water'

Trump has directed Agriculture Secretary Sonny Perdue to "use his broad authority to implement a plan to protect American farmers and agriculture."

The tariffs are rippling into Iowa manufacturing as well.

The state is home to large ag equipment manufacturers that include Deere, Kinze and Vermeer, and seed giant Pioneer, a unit of DowDuPont's Corteva Agriscience.

Deere and DowDuPont leaders have said they're concerned the proposed tariffs would hurt profits, which are tied to the economic health of farmers.

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U.S. Secretary of Agriculture Sonny Perdue talks about the renegotiating of NAFTA, and explains his comments about a possible contingency plan if there was a withdrawal from the agreement.
Michael Zamora/The Register

David Zrostlik, president of Stellar Industries, the maker of large service trucks in Garner, Iowa, was a Trump supporter two years ago. He said he likes the president's moves, cutting taxes and re-evaluating regulations.

The tariffs, though, "are a cold bucket of water," he said.

"There are a better ways to get things negotiated than putting all American industry and agriculture in peril," Zrostlik said.

'It's how Trump works'

Tim Hagle, a University of Iowa political scientist, said he thinks many Iowans will "wait and see" how Trump's trade negotiations play out.

The New York billionaire developer received 51% of the Iowa vote in 2016, winning in 93 of 99 counties.